These quantities must be estimated, and the ensuing estimates will contain some degree of uncertainty; the process in inherently risky (Risk, 2004).
The acquisition of one firm by another is, of course, an investment made under uncertainty. The basic principle of valuation applies: A firm should be acquired if it generates a positive NPV to the shareholders (Ross, 2005, pg 795)... displayed 300 characters
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The basic principle of valuation applies: A firm should be acquired if it generates a positive NPV to the shareholders (Ross, 2005, pg 795). NPV is the difference between the present value of cash inflows and the present value of cash outflows (Investopedia, 2007).
I began by analyzing and comparing the NPV of both companies... displayed next 300 characters
Decisions which. These decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria...
That study concluded that the consensus estimate among those 226 economists for the equity risk premium is 7% per year over 10 and 30-year time horizons, and 6% to 7% over 1 and 5-year time horizons...
One of the deficiencies in using the traditional approaches of operations research for problem solving is that many of the data used in model are merely estimates and others are based oh probabilities...
market risk. The price on oil is exposed to market risk and the risk cannot be removed thru diversification. It is therefore impotent for managers to know what's on stake and how they can cope with the uncertainty...
This means that this approach is useless in many cases. Furthermore, even for companies that do pay dividends, the key underlying assumption is that the dividend grows at a constant rate, and this will never be exactly the case...
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